LIVE GST Audit Course by CA Sachin Jain. Register Now!!

MANEGERIAL REMUNRATION

CA Sandeep Thakur (Managment Trainee) (188 Points)

19 August 2009

Any body can please tell me the procedure regarding the manegerial remunration of listed &public company under schdule XIII section 198 269 309 and 349 regards sandeep

Reply
Follow
Share

2 Replies

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 19 August 2009

Hi,

Please elaborate your question. What exactly you want to know about managerial remuneratio.

Meaning of remuneration

The remuneration includes pay, compensation, or reward for work, etc. The word remuneration is defined in the explanation appended to section 198 of the Companies Act. Accordingly, for the purposes of sections 198, 309, 310 and 311, remuneration shall include the following:—

(a) any expenditure incurred by the company in providing any rent free accommodation, or any other benefit or amenity in respect of accommodation, free of charge, to any of the company's directors and manager;

(b) any expenditure incurred by the company in providing any other benefit or amenity free of charge or at a concessional rate to any of the company's directors and manager;

(c) any expenditure incurred by the company in respect of any obligation or service, which, but for such expenditure by the company, would have been incurred by any of the company's directors and manager; and

(d) any expenditure incurred by the company to effect any insurance on the life of, or to provide any pension, annuity or gratuity for, any of the company's directors and manager or his spouse or child.

Expenditure incurred on maintenance of vehicles would fall within the meaning of the expression 'remuneration' and once remuneration is fixed as provided under section 309 it is not possible to state that the expenditure incurred by the company on personal use of car by directors would not be allowable deduction. In so far as the company is concerned the expenditure is business expenditure, which could not be disallowed as such. [Sayaji Iron & Engineering Co. v CIT (2002) Comp Cas 675 (Guj)].

Total ceiling of managerial remuneration

Section 198(1) relates to overall maximum managerial remuneration and managerial remuneration in case of absence or inadequacy of profits. The total managerial remuneration payable by a public company or a private company which is a subsidiary of a public company, to its directors and its manager in respect of any financial year shall not exceed 11% of the net profits of the company for that financial year. Such net profits shall be computed in a manner laid down under sections 349 and 350, except that the remuneration of the directors shall not be deducted from the gross profits.

Remuneration is payable to all the directors including managing and whole-time directors and in any capacity. Therefore, it includes the remuneration for services rendered by him in any other capacity other than that of a director.

Regards

CA Sandeep Thakur (Managment Trainee) (188 Points)
Replied 19 August 2009

i jus wnt to know if a comany comes into profit 1st tym . n overall limit under schdule 13 is duly complied and CG approval has been obtaion in the form 25c . in that case ihave to check the 198 and 349 working or not ????

if the appointment is made under section 269 then there are two ways of paying the remun.

as per schedule XIII or with the approval of CG???